Business Taxes Law Guide – Revision 2015

Sales and Use Tax Annotations

570.0000 USE OF PROPERTY IN STATE AND USE TAX GENERALLY

Annotation 570.1677

(h) CREDIT FOR TAX IMPOSED BY OTHER JURISDICTIONS

570.1677Taxes Paid to Another State. A California dealer sold a vehicle to a Utah company which furnished a resale certificate. The Utah company leased the vehicle to a California resident and states that Utah tax was paid on the lease payments.

The Utah company is required to collect use tax from the California resident since the Utah company is a retailer deriving rentals from a lease of tangible personal property situated in this state and is thus engaged in business in this state. The California resident, as the consumer, is also liable for the use tax. The Utah Code provides that tax need not be paid if the leased property is used exclusively in a foreign state. Therefore, credit for tax paid to another state (section 6406) is not allowed since Utah law does not impose a tax on the rental to the California resident. 8/25/75.